Moving out? More young adults leaving Mom and Dad, forming households.

Young adults in the US increasingly are moving out and forming their own households as the economy improves, according to a recent report from Barclays. 

By , Staff writer

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    A moving truck is shown at a house that was sold in Palo Alto, Calif., in 2012. According to a recent report, household formation among young adults is improving.
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Good news for baby boomers across America with long-delayed plans for home gyms: Your kids are finally moving out.

Thanks to an improving economy and more cheery job prospects, more young adults in the US are striking out and forming their own households, according to a recent Barclays analysis of census data. The study took a number of factors into account, including employment statistics, housing data, and age statistics for heads of households.

“Recent data do suggest that household formation among young adults is improving,” Michael Gapen, an economist for Barclays Research, writes in the report. “In particular, data from the Current Population Survey, which includes extensive information on both the number and characteristics of US households over time, suggest that more young adults are now finding it feasible to move out.”

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The report noted several statistical trends pointing in the direction of stronger household formation: In 2013, the number of 18- to 24-year-olds living with their parents fell  for the first time in eight years. “In 2013, 55.3 percent of 18-24 year olds lived at home, down from 56.2 percent in 2012,” the report reads. "Given that the Current Population Survey estimates that there were 30 million 18-24 year olds in the US in 2013, the one percentage point decline represents 300,000 young adults looking for alternative living arrangements.”

Employment among the youngest adults has also increased. The employment-to-population-ratio for young adults rose to 47.7 percent in May, up from 46.5 percent in 2013. Also, 25- to 54-year-olds saw their employment prospects improve.

All of this bodes well for the housing market, particularly the multifamily sector. Increased construction of multifamily housing structures and a growing rental market have characterized much of the US housing recovery up until this point; more young adults finding their own housing should help that trend continue.

“The ability of younger adults to move out into new living arrangements should boost housing demand, but several factors suggest that the effect on the housing sector will be modest and focused,” Mr. Gapen writes. "Young adults are likely to move from one consolidated living arrangement to another. New household formation that is driven by young adults is likely to support rental demand and multi-family start activity. From there, stronger labor markets and time may move households from renter to owner status.” 

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